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Velasco v. Sei Pharmaceuticals, Inc.

United States District Court, Ninth Circuit

June 5, 2013

ANTHONY VELASCO, on behalf of himself and all others similarly situated, Plaintiff,
SEI PHARMACEUTICALS, INC., a Florida Corporation, and DOES 1-10, inclusive, Defendants.


WILLIAM Q. HAYES, District Judge.

The matter before the Court is the Motion to Dismiss Plaintiff's First Amended Class Action Complaint, filed by Defendant SEI Pharmaceuticals, Inc. (ECF No. 22).

I. Background

On February 1, 2013, Plaintiff Anthony Velasco filed the First Amended Complaint, which is the operative pleading in this action. (ECF No. 20).

A. Allegations of the First Amended Complaint

Defendant manufactures, markets and sells MethylHex 4, 2 (the "Product") as a supplement which it represents has the ability to provide an "elevated sense of well-being, improved mood, increased CLEAN energy, suppressed appetite and heightened focus, " in addition to being "a powerful CNS stimulant, for added energy, increased clarity and a boost in physical performance, especially valuable to athletes during calorie restriction or when a high level of focus is needed." Id. ¶ 8. The Product lists 4-methylhexan-2-amine HCL, also known as dimethylamylamine or DMAA, as one of its ingredients. Id. ¶¶ 18, 19. The Product label claims that the DMAA in the Product consisted of "Geranium Extract Leaves and Stem, " when, in fact, the DMAA in the Product was synthetic and not extracted from geraniums. Id. ¶ 19. The Food and Drug Administration ("FDA") has sent a warning letter to Defendant stating, among other things, that synthetically-produced DMAA is not a "dietary ingredient" under the Dietary Supplement Health and Education Act of 1994 and, therefore, is not eligible to be used as an active ingredient in a dietary supplement. Id. ¶ 16. The FDA has received 42 adverse event reports on products containing DMAA, some including complaints of cardiac disorders, nervous system disorders, psychiatric disorders, and death. Id. ¶ 15.

Plaintiff purchased the Product in July or August of 2011 in reliance on Defendant's misrepresentations regarding the efficacy, safety and legality of the Product. Id. at ¶¶ 18, 22. But for Defendant's misrepresentations and material omissions, Plaintiff would not have purchased or paid as much for the Product. Id. ¶ 22. Plaintiff asserts the following three causes of action against Defendant: (1) false advertising in violation of California Business & Professions Code §17500; (2) unfair competition in violation of California Business & Professions Code §17200, et seq.; and (3) unfair competition and deceptive business practices in violation of California Civil Code §1770, et seq. Plaintiff purports to bring a class action on behalf of all persons who are citizens or residents of the United States of America who purchased the Product within the four years prior to the filing of the original complaint.

B. Motion to Dismiss

On February 12, 2013, Defendant filed the Motion to Dismiss Plaintiff's First Amended Class Action Complaint. (ECF No. 22). Defendant contends that "this case calls for factual and legal determinations that should be resolved by the responsible agency itself, the FDA, guided by its own technical expertise and policy objectives." Id. at 8. Defendant contends:

The Court should defer to the primary jurisdiction' of the FDA, as the agency charged with protecting the public health and determining and remedying alleged non-compliance with federal regulations regarding dietary supplement labeling and marketing. Where, as here, the legislature has created a complex regulatory scheme enforced by an executive agency with expertise in the subject matter area and with the need for uniformity in application of such complex regulations, it is appropriate at the very least for the Court to decline to adjudicate the matter until the responsible administrative agency has considered the issues.

Id. Defendant contends that, pursuant to the primary jurisdiction doctrine, "this case should be dismissed with prejudice in deference to the FDA or, at a minimum, the case should be stayed pending referral of the regulatory' issues to the FDA." Id. at 9. Defendant alternatively contends that the class allegations should be dismissed or stricken because whether the class members read and relied on the statements on the Product's packaging is inherently an individual analysis and thus not one which provides a basis for a class action.

On March 5, 2013, Plaintiff filed an opposition to the Motion to Dismiss. (ECF No. 23). Plaintiff contends that all of Plaintiff's claims are grounded in California consumer protection statutes, and are actionable independent of any determinations delegated to the jurisdiction of the FDA. Plaintiff asserts that, a week prior to the filing of Plaintiff's original Complaint, the FDA issued a warning letter to Defendant demanding that Defendant immediately cease distribution of the Product. See id. at 10. Plaintiff contends that, "since the issues entailed here are not within the exclusive jurisdiction of the FDA, and the FDA has already substantially performed the regulatory functions Defendant alleges are exclusively within FDA jurisdiction, the Court need not invoke its discretionary authority to defer the matter to the FDA based on the primary jurisdiction doctrine." Id. at 5. Plaintiff contends that the putative class satisfies the commonality requirement because "once a named plaintiff establishes that he or she suffered injury in fact and lost money or property as a result of the unfair competition, no further individualized proof of injury or causation is required to impose restitution liability against the defendant in favor of absent class members." Id. at 20-21.

On March 11, 2013, Defendant filed a reply in support of the Motion to ...

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